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A photography deal offered on Groupon in Atlanta yesterday turned messy when it was revealed that the photographer had promoted her work with stolen images and was far from equipped to carry out the terms of the Groupon.

Groupon user SP, who called attention to the fishiness of the Dana Dawes Photography deal in the first place, brought up the following interesting point in the discussion thread.

“Groupon – one major clue that the business is fraudulent is if they offer a deal like this, that cannot be physically fulfilled by a true professional photographer. I’ve seen these deals pop up countless times on groupon, and no one is verifying that these are legitimate businesses that can fulfill their promises. It is physically impossible for a pro photog full time to do 1,000 sessions in a year (and on location at that).”

The volume of users (around 2,000) generated for a small photography service by a Groupon deal seems pretty impossible to handle for mom and pop shops. I ended up not buying a heavily discounted one-hour cleaning Groupon for a similar reason, when the deal closed it basically meant 2,000 hours of work for just a couple of guys, which seemed to me like it would take years.

From Jodie O, on the discussion board.

“To allow photographers to come on here and sell out thousands of “deals” that let me tell you, speaking as a professional – full time business for 7 years now – I know for a fact that this is an impossible schedule to keep. Simple math will tell you that after Groupon takes it’s cut, she will be left with $35. After she pays her gas money, pays for her equipment, even internet service and office supplies…. next, the session, the travel time, the editing, the burning on CD… now we are seriously talking, working for not even minimum wage, but we are looking at $1 or $2 an hour if she’s lucky, because by my calculations, and how I personally work as a professional, I would be in the red, as in, NEGATIVE a few dollars an hour. A fellow professional just said to me recently, she would be better off paying each person $75 to stay home and not do the session.”

The fact that no single photographer could fulfill thousands of shoots in a reasonable time frame, calls into question whether Groupon should enforce limits when deals like this are unreasonable, which is currently the onus of the merchant. From Groupon representative Julie Mossler:

“We’ve always offered merchants the ability to cap their deals to ensure they only sell an amount of Groupons that permits them to give customers the best service possible. Some choose to use a cap, and some don’t. The businesses that find success on Groupon are those who are honest with themselves, know their books and aim for a manageable number of customers.”

The case of Dana Dawes Photography makes it clear what happens when small business owners find it hard to not only be honest with themselves, but also with their customers — the end result being thousands of refunds from Groupon and the eventual pulling of the deal, which oddly reappeared on Dawes’ personal site.

But what about when business owners overestimate their capabilities, and end up like Jessie Burke from Posie’s Diner, who recently wrote a blog post on Facebook about the drawbacks of the Groupon model.

“After three months of Groupons coming through the door, I started to see the results really hurting us financially. There came a time when we literally couldn’t not make payroll because at that point in time we had lost nearly $8,000 with our Groupon campaign. We literally had to take $8,000 out of our personal savings to cover payroll and rent that month. It was sickening, especially after our sales had been rising.”

“[I was] asked if there was a cap on how many were sold to help protect the business from too much loss, and the simple answer is, no. When you sign up for Groupon, you are agreeing to sell as many as get sold… and why would Groupon want it any other way? They get half of the earnings.”

Should Groupon enact stricter policies to protect small businesses, especially in light of this?

According to Mossler, merchants do have the options to cap their deals the day of in the case of overwhelming demand. Says Mossler, “Our sales reps work with each merchant to craft the deal that’s best for their particular business, and we push back if we think they’ll be overwhelmed; but ultimately it’s the responsibility of the merchant to know what they can handle. In the case of Dana Dawes, her deal was capped at 1500.”

To its credit, Groupon is currently re-evaluating the photography deal structure after reading the comments on the discussion board, which it pulled from the site. For a particularly interesting read and a glimpse of the story as it unfolded, go here.